- Nebius stock price dropped by over 10% on Tuesday.
- The company announced that it would raise $3.75 billion.
- Nebius’ business is expected to continue growing in the coming years.
Nebius stock price suffered a harsh reversal on Tuesday as it dropped by over 10%. It dropped to a low of $113, down from its highest point this week. This retreat has brought its market capitalization from over $32.5 billion to the current $29.3 billion. So, is NBIS stock a buy or sell after the recent developments?
Nebius Stock Price Slipped After Recent NVIDIA and Meta Platforms News
The NBIS stock price jumped from a low of $73.9, its lowest level on February 5, to a high of $132 this week. It then retreated to the current $116 as investors booked profits after the recent surge.
Nebius made headlines earlier this month when the company received a $2 billion investment from NVIDIA, the biggest company in the world. The investment will be necessary as it continues growing its capital expenditure to build data centers.
The most important news came this week after it reached a deal with Meta Platforms, the parent company of Instagram, Facebook, and WhatsApp. In addition to a $3 billion deal it made last year, the company will spend another $27 billion. The first part of the deal will see Meta pay $12 billion in the next five years.
Meta also committed to spending another $15 billion purchasing more NVIDIA Vera Rubin in a five-year period. This makes it one to the biggest deal between a hyperscaler and a neocloud company.
Therefore, the NBIS stock price tumbled after the company announced a $3.75 billion private offering of its convertible senior notes, a move that will see it dilute its investors. It has also already diluted its investors as the number of outstanding shares jumped from 202 million last year to the current 219 million.
On the positive side, Nebius is one of the fastest-growing companies in the US, and its ongoing deal-making means that the trajectory will continue growing in the coming years.
The average estimate among analysts is that its revenue will jump by 529% this year to over $3.3 billion. It will then grow by 185% next year to over $9.5 billion. The actual revenue figure will likely be better than these estimates since they were made before the giant Meta Platforms deal.
The most recent numbers showed that its growth accelerated in the fourth quarter, primarily because of its Microsoft business. It announced a $19.4 billion deal with Microsoft last year and has already started delivering the service.
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While its cloud business is the most popular, the company has other divisions, including Avride and TripleTen. Avride, its autonomous vehicle and robotics business, will likely continue growing in the coming years, helped by the partnership with Uber. Analysts believe that the company may ultimately decide to spin it off into a separate company and use the funds to fund its AI business.
The company also has a large stake in Clickhouse, which recently raised $400 million in funds at a $15 billion valuation. It is one of the biggest shareholders in the company.
NBIS Stock Price Technical Analysis
Nebius stock chart | Source: TradingView
The daily chart shows that the NBIS stock price made a double bottom pattern at $73.9 and a neckline at $110. A double-bottom is one of the most common bullish reversal sign in technical analysis.
The stock jumped to a high of $183 this week after the Meta Platforms deal. It then pulled back amid fears of dilution.
Still, on the positive side, the stock sits above all moving averages and the Supertrend indicator. Therefore, the stock will likely rebound in the coming weeks, possibly to the all-time high of $140. A move above that level will point to more gains, potentially to the psychological level at $150.
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